You hate pink. So does your dearest. You love those cream cheese pancakes. Your darling follows suit. You like to sleep way past 11 AM. Your dream boat is right next to you. Ah! What compatibility! But, are you both ‘so compatible’ when it comes to money? Financial compatibility is as important as love compatibility (if not more!).
Take this quiz and find out just how financially compatible you are with your partner.
Done? How good was your match? Not happy? Don’t worry. Here’s how you can fix things so that you both become the most happening couple financially. We take you through the questions to tell you what exactly you should be sharing with your better half, and you, of course, need to know everything about them as well. Ready?
#1 I know exactly how much my beloved earns
It is crucial that you know your partner’s take-home salary. A good annual package doesn’t mean that your sweetheart is earning big bucks. There are taxes, variable components and other factors that can lower the monthly take-home salary to a large extent. Don’t know anything about your partner’s finances? Tsk! That’s bad! Take the case of Roopa. She was totally in love with Anand and thought that he earned well because he always used branded stuff. When one of her friends needed a loan, she promised that Anand would give it, only to find out that Anand’s salary was peanuts. So, don’t shy away from asking your better half about their salary.
#2 We talk about finances
Even though it is not necessary to talk ‘money’ all the time, you must know each other’s money situation. This applies even if the two of you haven’t made a formal commitment to each other yet. This will help you cross several hurdles that might come up in the future. Let’s look at Ishitha. She courted Rohan for a year and got engaged to him. They never bothered to discuss their finances. Then one day Ishitha found out that Rohan gives 20% of his monthly salary to charity. She wasn’t happy. She spoke to Rohan who didn’t want to change anything about himself. Ishitha called off the engagement. At least she knew about this before the wedding. Imagine the situation if she had found out about it after they were married. Havoc! Hence, being on the same page as your partner when it comes to finances is important and will ensure that it’s smooth sailing as a couple.
#3 I hide financial secrets from my partner
This is the worst possible thing to do. You should disclose all your liabilities to your partner if you are planning to live with them. Hiding things like big Credit Card outstanding balances and loan accounts could spell disaster. This is exactly what happened in Pooja and Rahul’s case. Rahul had a number of loans that he never told Pooja about. After they got married, he expected Pooja to help him repay all the loans. Pooja wasn’t very happy. Some months later, Pooja found that he had borrowed money from friends and relatives too, which he expected her to repay. Pooja had had enough and decided to file for divorce. Learn from this story and disclose all your liabilities to your better half. And of course, get the same information from them.
#4 When it comes to money, I trust my partner
If you don’t trust your partner with money, you should think twice about living with them. Money is an everyday factor in our lives and if you have no trust, you will have issues every day. If you think your partner is being irresponsible with money, talk to them. Ask them to change their attitude by explaining to them how it will help you both in the long run. Set a budget and tell your partner that both of you should try to stick to it.
#5 My partner trusts me with financial decisions
Can you confidently say that your partner will trust you with their money? If not, you might need to look into your spending habits. Your partner might not be too happy if they like to save while you spend on frivolous things. Sorting this out early in your relationship could help avoid a number of unpleasant situations. Here’s how Simran found herself in one. Simran was getting married and wanted to start purchasing clothes and other accessories for her wedding. She had given Rs. 2 lakh to her fiancée and told him to keep it safely until they both could shop for their clothes. She had to take a sudden business trip and when she returned she was shocked to find that her fiancée had spent half the money for his accessories when she thought she could finish purchasing clothes and accessories for both of them for that amount. If she knew that he would be irresponsible, she would never have given that money to him in the first place. Understand why you need to know if your partner will trust you with their money now?
#6 Have you discussed your financial goals?
When you are living together, it is important to have common financial goals so that both of you can fund them. This way, you both can enjoy those goals together. Imagine a situation where you are saving through a Fixed Deposit for a foreign vacation when your partner is thinking about using the same money to buy a premium bike. Wouldn’t there be a big row? When your goals are aligned, things on the financial front will move very smoothly and both you and your partner will understand when there is a shortfall to meet any of those goals.
#7 We have discussed our taxes and planned for them
Taxes take up a whole lot of money. As Winston Churchill says, “There is no such thing as a good tax!” Planning for your taxes early on is very important. Even more important is the fact that you do it along with your partner if they are working. Things might go haywire if you don’t do this. Here’s a perfect example of that happening. Seema earned as much as her husband but they always kept their taxes separate. Seema got a promotion and pay hike last year and hence her taxes went up. So she decided to invest an additional Rs. 50,000 in the National Pension Scheme to save tax. She declared the same to her employer. She never mentioned it to her husband but thought that she would take the money from her savings to invest when it was time to file her taxes. When tax-filing time came around, Seema found that her husband had used the money to order an expensive gift for her in-laws 30th wedding anniversary. She wasn’t happy because she now had to pay extra taxes. Problem like this could arise when you and your partner are not on the same page when it comes to finances. Discuss your taxes at the start of the financial year and plan them together so that you can both meet those investment deadlines.
#8 I know my partner’s loans and investments
Worried that your partner will take you for a gold digger if you ask them about their investments? Don’t be! It’s better than finding out later that they are one among the urban poor. Knowing about your partner’s loans and investments beforehand will give you an idea as to whether they are spenders or savers. You can also know whether you will have money issues later if you both are quite different in your attitudes. We are sure you wouldn’t want to be at loggerheads every day when you can spend that time (and money!) together.
#9 I’m comfortable with my partner’s spending habits
It is absolutely essential that you be comfortable with your partner’s spending habits. Find out their values regarding money and see if they match yours. Do they agree with you on how windfalls should be spent, how to meet loans and whether taking a number of loans is okay? This will tell you if their money personality is the same as yours. Disagreements on certain points might be okay but totally diverse views will cause issues later. If both of you are spendthrifts, then you need to talk ‘money’ more often than other couples.
#10 We have talked about our retirement savings
It is never too early to talk about your retirement. The earlier you start saving for your retirement the more money you would have after you retire. Ideally the return from your investments should cover 100% of the expenses you might incur in a year. This isn’t easily achievable. Consider this: If you earn Rs. 6 lakh and save Rs. 2 lakh out of that every year and your investments earn 10%, it will take 12 years for the income from your investments to cover your expenses (assuming your expenses remain the same). That is why you must talk to your partner about retirement savings as soon as you can. Start planning for it together and things will be smooth after retirement.
We have just listed few important points regarding money, which might cause a rift in your relationship. Be aware of them, correct them, lay out a path to financial stability and you will be able to see a change in your relationship sooner than you know. What’s more, you’ll be able to save enough for that piece of diamond jewellery or that exotic vacation or your dream home. It will be very easy to reach your goals when you plan for them together. And if you are ever short of funds, you could always opt for a loan. With the consent of your partner, of course!